Warehouse sales slow in third quarter

the_warehouse_storeWarehouse Group, the country’s second-biggest listed retailer, has posted a slower rate of sales growth in the third quarter as it made changes to its business.

Still, it has affirmed it’s on track to meet its forecast annual profit.

Group sales rose 1.7 per cent to $683.5 million in the third quarter ended April 30, compared with a 5.5 per cent pace in the same quarter a year earlier.

In March, Warehouse posted a 76 per cent drop in first-half profit to $13.6 million after taking an impairment charge against its financial services unit, recognising restructuring costs and earning less from its ‘red shed’ department stores.

At the time, it said weak trading had continued into the second half of the year and as a result, full-year adjusted profit was forecast to be $54 million to $58 million, a drop of as much as 15 per cent from a year earlier.

The retailer is on a cost-cutting drive, stripping a net 130 jobs at its store support offices in Auckland and some regional centres, in a slimmed business structure to whittle down leadership into its two new arms and move support systems of the existing brands to be group-wide.

“The sales growth achieved by the group in the third quarter is positive considering the amount of internal change the business has gone through in the third quarter,” chief executive Nick Grayston said.

“The varied performance across the brands highlights that we have a lot of work to do as we position the business to face the competitive challenges ahead of us”.

In the company’s largest unit, its 92 ‘red shed’ Warehouse stores lifted sales 0.6 per cent to $391.7 million.

Its 77 Noel Leeming appliance and technology stores increased sales 5.7 per cent to $190.9m.

Warehouse shares last traded at $2.12 and have dropped 18 per cent the past year.

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